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A Progressive, High Motivation Wage Payment Plan

Written by: Leonard Scott

Article Overview: A progressive, high motivation wage payment plan based on achieving performance objectives is one of the most important elements in a program aimed at motivating employees to achieve high levels of output, to care in performing their duties, to master jobs quickly, to desire to move into more demanding and higher paid work, to work as a team, and to grow with their employer using their continuity of employment and deep knowledge of the organization, its work, its operations, and its customers to innovate and bring new ideas to the firm.

A Progressive, High Motivation Wage Payment Plan

A progressive, high motivation wage payment plan based on achieving performance objectives is one of the most important elements in a program aimed at motivating employees to achieve high levels of output, to care in performing their duties, to master jobs quickly, to desire to move into more demanding and higher paid work, to work as a team, and to grow with their employer using their continuity of employment and deep knowledge of the organization, its work, its operations, and its customers to innovate and bring new ideas to the firm.

This program would be appropriate for any organization that has hourly paid employees.

The following is a description of just such a progressive, high motivate pay plan:

The wage payment plan contains four classifications of wage rates:

a. Starting Rate — wage rate used for period of orientation and observation. This rate is paid to a newly hired employee who has no experience in the work of the classification into which he/she is hired.

b. Training Wage Rates — A range of starting rates for partially qualified employees (those who have some experience in the work of the classification into which they are hired and a scale of interim wage rates to be used for inexperienced employees as they progress in their training toward the fully qualified level of job performance.

c. Basic Wage Rates — wage rates which are comparable to those paid in the area and industry or field for similar work for employees who have been recognized by management to be fully capable of performing all the requirements of the job.

d. Merit Wage Rates — wage rates for fully qualified employees with substantial service for above normal effort.

If the organization operates around the clock on a five or six day basis or on a 24/7 basis, a schedule of shift premiums comparable to area or industry or field norms should be established.

Probationary Period

A two or three month probationary period will apply to all hourly paid employees.

Wage Rate Determination

1. At time of hire, the hiring manager will determine if the worker being employed is completely inexperienced in the work of the job into which he/she is moving, partially experienced in the work, or fully experienced in the work. If the employee is completely inexperienced, his/her beginning rate will the starting rate of the classification. If the employee is partially qualified, his/her beginning rate will be one of the training rates. If the employee is fully qualified his/her beginning rate will be the “A” training rate or the Basic Wage (BWR) rate minus 35 cents or 50 cents. “A” training rate or the Basic Wage Rate minus 35 cents or 50 cents may be granted to a new employee only with the approval of the owner or top manager in the function. The department head should determine the appropriate beginning for inexperienced and partially qualified employees. Should a department head have difficulty determining the beginning rate for a partially qualified employee, he/she should consult with his/her superior or the owner.

2. The time interval between performance reviews is as follows:

Starting Rate—First Training rate = Three to Four Months as determined by company policy (raise may be delayed only one month)

One Training Rate to another = Three or Four Months as determined by company

Training Rate policy (raise may be delayed up to two months)

Training Rate “A” to BWR = Three or Four Months as determined by company

and BWR minus 35 to 50 cents policy (raise may be delayed up to two months)

to BWR

The wage rates shown in the various wage progressions will be granted on a performance basis only. No automatic increases will be given. An inexperienced employee hired at the Starting Rate will not receive a performance review until three months have elapsed from date of hire. A department head may give him/her a raise immediately after his/her three months of employment or delay it up to another month. No further delays in this case will be approved for sub-standard performance. He/she must be discharged if the department head cannot justify giving hi/her a raise after his/her fourth month of employment.

A partially qualified employee starting at a given Training Rate will not receive his/her first performance review until three months or four months (as company policy dictates) have elapsed from date of hire. This rule also applies to fully qualified employee If a department head wishes to bring a partially qualified employee up to the next rate in the progression or bring a fully qualified employee up to the next rate (say from Training Rate “A ” minus 50 cents to Training Rate “A” in the progression or bring a fully qualified employee to the BWR from Training Rate “A” or from 30 cents or 50 cents below the BWR in less than three or four months, he/she must evaluate the employee and put through a wage increase for the employee. A department head may delay a wage increase for an additional one month with the approval of the owner or the department head’s superior. Approval for a delay in a wage increase will not be given where the delay period is more than two months.

Employees not performing at the level dictated by their Training Rate or BWR must be so informed, warned that disciplinary action will be taken if no improvement is made and finally discharged if no improvement is forthcoming. In cases of sub-standard performance, discharge must be delayed no longer than one month following the date of the performance review. The steps in all such disciplinary cases must be documented by the department head.

3. One double jump increase, e.g., increase from Training Rate “C” to a Training Rate “A” and one quick raise, e.g., increase from Training Rate “A” to the BWR in less than three or four months, may be given to an employee while in a given classification. One person in management (Human Resources Person, Office Manager, Controller, or even the Owner depending on the size of the firm) in the organization should be given the responsibility to administer the provisions of the Wage Payment Program. This includes sending out and receiving evaluation forms at the appropriate times.

4. Guidelines for Granting Merit Range Increases

A merit increase may be granted for an employee’s long service and or for continuing above standard job performance.

a. Employee must be at the Basic Wage rate (BWR) in classification for at least twelve months and have at least three years of service to be considered for a “long service” increase.

b. No “long service” or “continuing above standard job performance” increase may be greater than 50 cents to 75 cents.

c. Above standard job performance increases must be separated from each other by at least six to nine months.

d. No “long service” or “continuing above standard job performance increase may bring an employee’s wage rate above the maximum merit wage arte for the classification.

5. An employee temporarily (one month or less) assigned to another classification will carry his/her current rate in his/her regular classification unless he/she is fully qualified in the classification and it is a higher rated job. In that case, the employee will be paid the BWR of the classification to which he/she is temporarily assigned.

6. The wage rates paid to an employee who permanently transfers from one classification to another are as follows:

Transfer Rates

The wage rate of an employee permanently transferred from one classifications to another will be determined by the following guidelines:

1. Employee Fully Experienced in new Classification:

a. Higher Rated Job — BWR of new job

b. Equally rated Job — BWR of new job

c. Lower Rated Job — BWR of new job

2. Employee Not Fully Experienced in New Classification:

a. Higher Rated Job — Next higher rate in the wage progression of the new classification, but in no case a rate higher than Training Rate “A”

b. Equally Rated Job — Training Rate “A”

c. Lower Rated Job — Training Rate “A”

The responsibility for determining whether or not an employee is experienced or not in the classification into which he/she is being transferred will be the responsibility of the Owner or the department head of the department receiving the employee.

Distinction Between Permanent and Temporary Transfer:

A permanent transfer is one that lasts for more than three months. If an employee is transferred across department lines, the department head receiving the employee has the responsibility for initiating a wage rate change if any is required. When an employee is transferred across department lines, the two department heads involved must coordinate efforts to ensure that the employee is paid the appropriate wage rate.

Sample Wage Rate Progressions:

WAGE RATE SHEETS

Dept. 100 - Toolroom

Training Rates

Classification Title Staring Rt G F E D C B A Basic Wage Rate Max. Merit Wage Rate

Die Maker A 7.94 8.10 8.26 8.43 8.67 8.93 9.09 9.23 9.53

Die maker B 7.83 7.91 8.07 8.23 8.39 8.54 8.70 8.95

Dept. 130 – Maintenance

Classification Title Staring Rt. G F E D C B A Basic Wage Rate Max. Merit Wage Rate

Maint. Man A 7.94 8.10 8.26 8.43 8.67 8.93 9.09 9.23 9.53

Maint. Man B 7.80 7.89 8.03 8.19 8.31 8.42 8.66

Janitor 7.28 7.37 7.53

Dept. 200 – Heading

Classification Title Starting Rt. G F E D C B A Basic Wage Rate Max. Merit Wage Rate

Set-Up Man 7.85 7.93 8.10 8.26 8.42 8.55 8.67 8.80 9.09

Trucker/Wire 7.72 7.83 7.93 8.04 8.15 8.37

Performance Review Forms can be designed in-house, or they can be secured from the Internet. The recommended basic factors to be considered in appraising an employee’s performance are:

—Quantity of Work

—Quality of Work

—Developing & Maintaining Positive Interpersonal Relations

—Initiative & Ingenuity

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